The new coal plant standard

With all the fuss around the EPA’s proposed carbon dioxide standard for new power plants, you would be forgiven for missing the following line: “EPA projects that this proposed rule will result in negligible CO2 emission changes, quantified benefits, and costs by 2022.” That’s right, the standard will likely have little to no effect before the date by which EPA will be required by law to revise it.

Why? As I recently told the National Journal, because the most credible projections have natural gas so inexpensive for the next several years that very few power companies are planning to build new coal plants – compared with the 150 natural gas power plants in the works. Pulling the proposed standard wouldn’t change that reality. In fact, the one coal plant being built today includes carbon capture and storage (CCS), and is expected to meet the tough carbon standard EPA has proposed. A handful of additional coal plants with CCS may move forward in the next several years, as well.

So what’s all the fuss about?

Most of it is politics, which we’ll leave for others to discuss. (And exemplify.) Once you get past the politics, the proposal raises two important questions.

The first is: Does the proposal indicate how EPA will set carbon dioxide standards for existing power plants? No, according to EPA. Earlier this week, EPA Administrator Gina McCarthy said, “[CCS] is not seen, at least at this stage, as an add-on that could be used to put on an existing conventional coal facility." McCarthy isn’t alone in saying that. Even the Natural Resources Defense Council, the author of a detailed proposal for the existing plant standards, doesn’t see EPA requiring CCS for existing power plants.

The real question is the second one: Will the new standard advance CCS?

By every credible indication, coal and natural gas will be predominant sources of electricity in the United States and around the world for decades to come. If we don’t figure out how to use coal and natural gas while keeping their CO2 emissions out of the atmosphere, we will not solve the climate change problem. Today, CCS appears to be the most viable means of doing this. The International Energy Agency estimates that CCS can achieve 14 percent of the global greenhouse gas emissions reductions needed by 2050 to limit global warming to 2 degrees Celsius.

CCS is not a brand-new technology. There are nine active commercial-scale CCS projects at industrial plants around the world, six of them in the United States. The world’s first two commercial-scale CCS power plants -- Southern Company’s coal-fueled Kemper County energy facility in Mississippi, and Boundary Dam Power Station in Saskatchewan, Canada – are under construction and expected to be operational in 2014. Approximately 50 additional commercial-scale CCS projects in the power and industrial sectors are in various stages of development around the world. The problem with CCS isn’t that we don’t know how to do it – it’s that we don’t know how to do it inexpensively yet.

Pushing CCS down the learning/cost curve is a national and global imperative. The real question for the proposed new power plant standard is whether it hinders that process, helps it, or has much impact one way or the other. In particular, with natural gas so cheap, who will build the next several commercial-scale CCS power plants, the ones that will get us down the cost curve?

The answer is probably that CCS will only be built to accommodate the one industry that actually has an appetite for large amounts of carbon dioxide – the industry that pumps it underground to recover oil from otherwise tapped-out oil fields. This “enhanced oil recovery” has been underway in west Texas for 40 years, accounts for 6 percent of U.S. oil production, and could account for a lot more once we figure out how to get more carbon dioxide to the fields from industrial and power sources. In addition to deploying CCS, encouraging carbon dioxide enhanced oil recovery (CO2-EOR) would have the added benefits of safely storing carbon dioxide underground, boosting domestic oil production, and generating federal revenue.

What we should be asking is whether the new coal plant standard will be enough to advance CCS.